Cashing out refers to refinancing a mortgage for more than the balance owed and taking the difference in cash. For example, if a home is appraised at $100,000 and the borrower’s outstanding mortgage balance is $60,000, an 80% cash-out refinance would be a new loan of $80,000, which is 80% of $100,000. The new $80,000 mortgage pays off the $60,000 loan and leaves $20,000 in cash to the borrower.
Illustration only. Figures are hypothetical, do not reflect any actual offer, and exclude closing costs, fees and interest.
What are the benefits?
A cash-out refinance lets you access equity in your home for debt consolidation, home improvements, education costs, or other expenses. Depending on market rates and your current loan, a refinance may also lower your interest rate or your monthly payment.
Points to consider: extending your loan term or financing your closing costs can increase the total interest you pay over the life of the loan, and consolidating unsecured debt into a mortgage converts that debt into debt secured by your home.
On taxes: mortgage interest may be tax-deductible in some circumstances. Under current federal law, interest on cash-out proceeds is generally deductible only to the extent the funds are used to buy, build or substantially improve the home securing the loan, and other limits apply. Amerimutual Mortgage does not provide tax advice. Please consult your own tax advisor about your situation.
How can we help?
If you are considering this type of refinancing, Amerimutual Mortgage will work to identify a program that may suit your needs. Cash-out programs are available for owner-occupied and non-owner-occupied properties, including alternative-documentation programs for investment properties. Rates and terms vary by program, property type and borrower qualifications, and all loans are subject to lender approval. Call us at (718) 943-9200.